U.K. house price index dipped to the lowest level in more than a year in August owing to the increasing number of property coming to the market. The huge spending squeeze that is underway and the difficulty in obtaining finance amid low interest rates may deter housing market recovery.
A net 32% of estate agents reported a fall in house prices in August, sharply down from 8% in the previous month, a survey from the Royal Institution of Chartered Surveyors showed Tuesday. The latest figure was the lowest since May 2009 and notably weaker than the negative 12% balance expected by economists.
Also, around 38% of participants forecast a fall in prices in the coming three months rather than a rise. With the number of first time buyers coming onto the market easing and banks restricting lending, property prices will possibly soften in the months ahead, the report said.
Looking forward, price indicators are telling a mixed story which is consistent with the uncertainty hanging over the economy, the low level of interest rates and the lack of new house building, RICS spokesman Jeremy Leaf reportedly said.
House prices in many parts of the U.K. may be slipping but this does appear to be encouraging hopes amongst surveyors that sales levels could begin to pick up as a result, Leaf added. According to RICS, the restrictive attitude to the provision of mortgage finance will again limit transaction activity in the market.
First time buyers entering the market slowed as lenders tightened their credit conditions, a survey carried out by the Council of Mortgage Lenders showed yesterday. In July, loans to first-time buyers fell to 19,400 from 19,700 in June. Consequently, the share of first-time buyers in the market came in at 34%, down from 38% in the previous month.
The Bank of England data, released on August 19, showed a subdued mortgage lending in the U.K, despite a very low interest rate. "Gross lending for house purchase in July was similar to that in June, though approvals for house purchase edged down according to data from the major U.K. lenders," the bank said in its Trends in Lending report.
Led by the slowdown in residential construction, the Purchasing Managers' survey signaled weakness in the British construction sector growth. But the sector continued to expand in August as the index stayed above the 50 neutral level.
Recent house price data from Nationwide as well as Lloyds Banking Group Plc's Halifax division showed a slowdown in house price annual inflation. The house price index, according to Halifax, rose at a slower pace of 4.6% in August and the annual increase in Nationwide house prices was 3.9%.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.